Playing Catch-Up With Conservatives: Can Startup Energy Help Democrats?
WHY YOU SHOULD CARE
A healthy startup environment may be giving Democrats a leg up for 2020 … if these firms don’t sell out before then.
By Nick Fouriezos
The model is familiar in the venture capital world. A fund releases a call for pitches. The bids arrive in droves, each promising some revolutionary contribution: a software that conducts surveys over text, filling a gap between expensive phone polls and slanted online ones. A recruitment platform that can shift volunteers where they are most needed at a moment’s notice. An artificial intelligence-powered search tool that promises to let you know “your target better than they know themselves.”
The difference? These aren’t companies trying to drive change merely through business. Their focus is on politics. And they are being shepherded by a new vanguard of startup accelerators seeking to fundamentally change the way Democrats reach and mobilize voters, after a 2016 presidential election that saw liberals cede the digital-tech advantage they held during the early Barack Obama years to conservative power players. It’s a competition to catch up with Republicans that could shape how effectively different campaigns connect with potential voters in the 2020 elections.
Higher Ground Labs, based in Chicago and founded by former Obama campaigners, has invested $15 million in 36 startups working to bolster progressive politics. More than 3,000 campaigns have used its tools since the accelerator’s launch in 2017. It is looking to “spin out tools that can match trends and shifts in American attention,” which can “work on day one,” says Shomik Dutta, a partner at Higher Ground Labs.
We’re really focused on how to shift the balance of power in the United States.
Julie Menter, New Media Ventures
Arena, another startup accelerator wedded to liberal political causes, was also founded in 2017 and offers fellowships to selected entrepreneurs developing tech that Democratic candidates can use in elections. It drew 150 candidates to its very first fellowship summit. Even seed funds that have existed longer are seeing unprecedented interest post-2016, and as America heads toward its next presidential election. San Francisco-based New Media Ventures, which launched in 2010, has seen the number of relevant pitches it receives double between 2017 and 2019, from 250 to 525. The company has overall invested more than $50 million, including $1.5 million in funding for 17 new startups announced in July.
“We’re really focused on how to shift the balance of power in the United States to benefit the most amount of people,” says Julie Menter, its managing director. “We see capital as the catalyst to make that happen.”
The Democratic-leaning accelerators are hoping to ride the next phase of what America has seen in recent years: It was while in opposition that liberal and conservative causes have developed tech innovations that have then spurred them toward political success. If the Obama campaign’s ahead-of-its-time integration of social media platforms into its electioneering strategy assisted in the 2008 vote, Republicans did their bit ahead of the 2016 elections. The billionaire Koch brothers, Charles and David, promised to “close the gap” with Democrats by putting millions behind new campaign ventures such as the analytics group Themis and grassroots canvassing tech i360. Cambridge Analytica, the British political consulting firm that famously helped Trump using dubious tactics around Facebook data, counted Steve Bannon and GOP megadonor Robert Mercer among its founders, and also supported other Republican campaigns in the U.S.
📡📡 We are excited to announce our 2019 investments! These 11 cutting-edge political tech companies can help Democrats win in 2020. Meet our new startups here:https://t.co/njqcnFZEbT pic.twitter.com/mgLxULs7be
— Higher Ground Labs (@highergroundlab) June 20, 2019
Conservatives aren’t sitting on their heels when it comes to campaign tech innovations. Take, for example, uCampaign, launched in 2014, which is now developing apps for Trump’s 2020 campaign and other conservatives, or RumbleUp, a texting market leader. There are commonalities in the two approaches. The end goal with both is to innovate in nonelection years rather than just follow the politics boom-bust cycle that’s too often tied directly to presidential campaigns. There are also differences: While the Republican innovations have more of a command-and-control approach from top donors, the liberal tech advances are coming through seed funding competitions led by the accelerators.
The conservative model has its advantages. It allows founders to “start monolithic, well-funded companies from scratch that can serve its ecosystem really well,” Dutta concedes. But some conservatives worry that a top-down style limits their effectiveness. “It’s ironic to me when these free-market capitalist organizations claim conservative values but don’t put those values into practice,” American Majority PAC founder Ned Ryun, whose data-gathering technology Voter Gravity was a competitor to i360, told OZY in 2016.
That’s where liberal accelerators believe they have an advantage, by supporting a wider range of innovations. New Media Ventures, for instance, often funds groups targeting diversity, from Blavity, a brand focused on Black millennials, to Pulso, an organizing platform for Latinx voters. Its key criteria: Projects must be able to scale quickly and effectively, create progressive change and be able to generate revenue.
Higher Ground has tended to back more pure-tech platforms. Change Research, an online polling technology company, has released polls that are “90 percent cheaper, 30 percent faster and far more accurate,” Dutta says. Those qualities make polling more affordable for local election candidates, and are especially important after polls in key swing states, such as Michigan and Pennsylvania, were woefully incorrect leading up to the 2016 election. MobilizeAmerica, a volunteer management platform, has more than a million progressive activists signed up and can shift people instantly to areas of need. For instance, when the platform determined that congressional candidate Max Rose in Staten Island had more than enough volunteers, it was able to encourage canvassers to head to Antonio Delgado’s race in upstate New York instead. “It’s kind of like Open Table for activism,” Dutta says.
Yet the liberal venture-backed model pumping cash into for-profit companies also carries some risks from which the Republican approach — of clear-eyed, top-down support for specific politically motivated projects — is relatively immune. Tara McGowan — who leads the progressive nonprofit Acronym and whose tech company, Shadow, received $100,000 in early funding from Higher Ground — says that too many campaign tech gurus are focused on selling to a larger conglomerate. “The second you get a huge investment, you are on the hook to show profit,” McGowan says, which misaligns priorities away from winning elections. “That work should go back into R&D for the movement, and not into shareholder profits.”
For example, Washington-based marketing firm EveryAction acquired in June the digital tools division of Blue State Digital, the platform that helped power the Obama campaigns with inventions like one-click contributions. But Matt Compton, director of advocacy and engagement at Blue State, says the relationship will ultimately help progressive campaigns reach a larger audience. “In order to reach scale with these products, we need to have the kind of backing and investment to pool all the features and capabilities,” he says.
Democrats are wary of these new technologies becoming commoditized and then monopolized, thus stifling change. The hope is that healthy competition will keep either outcome from taking root. “Our job, as I see it as an impact investor, is to make sure there is always somebody nipping at your heels,” Dutta says. “We can’t sit back and let these companies become bloated.”